The Incredible Opportunities of Employing Big Data in the Insurance Industry

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Customer data and analytics, customer experience

Adrian Garcia-Sierra, Head of Digital and Experience at Axa Wealth, discusses how big data can become a competitive differentiator for insurance and wealth management companies in the next five to 10 years.

Big data is important as it relates to providing a seamless experience and about how people naturally interact; it’s the whole crowdsourcing and people-like-me factor. What we have is a broader business, AXA, fundamentally, is an insurance business and so we take people’s money in and then we provide a level of protection, security and guarantee for that payment that you make to us.

If you consider this theoretical approach, you or your family members may well pay a number of different insurance policies. It could be one or two different car insurance policies, a home contents and building insurance policy, travel policies, medical policies; there’s a number of different insurance products that are available to you that you could be investing into. People these days take insurance out on their dogs, their cats, their goldfish, goodness only knows what. And wealth management comes into that because, ultimately, it’s all about protection and investing your money and making the most of what you’ve got.

It’s all about that financial protection and helping to look after you, but what’s happened historically is this has been very individual. And the industry hasn’t taken into account the fact that humans don’t operate as individuals; we are animals and we operate in social groups – whether that’s you and your partner, or whether it’s you and your partner and a couple of kids, or your parents, or a group of friends. It may well be that you share a flat with two or three other other people, so why can’t you pool your resources together?

That’s where big data really starts to come in: you can start to pool pieces of data. If I just go back to that scenario of these various insurance products, what’s stopping there being a scenario where you could go along to an insurer, or group of insurers, or onto some sort of aggregating website, and you say: ‘These are our requirements as a collective group are that we need this amount of travel cover. We’ve got three cars between us, we want to insure the dog, we want this, that and the other. These are our requirements and now we need you, the insurer, to give us the best deal you possibly can.’

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And you actually have group-sourced, collected and collated responses to say, well actually, looking at your scenario, we know your postcode – because this is where big data is helping us pull all of this data together – we know how many claims there have been in that area in the past one, two, three, four, and five years. We also know, because we have this wealth management part to our business, that the average income in this postcode is pretty good for the people who we have as customers. Therefore, we think you’re a very low risk, so we’re going to offer a really good deal to cover you on all your insurance. Big data is facilitating and allowing us to do that.

If you roll that into the social sense, we are looking at hard, factual, financial data, but we’re also looking at more emotionally oriented data. So if we started to sift through commentaries, reviews that people have been putting in, and if we started to look at the habits and the behaviours – even Facebook conversations – data that we’re able to access, we can start to build up an incredibly rich picture of people who want products from us, and what is the best deal that we can offer them to balance the risk of where we still want to try and make a bit of money.

Pooling all of that together and making it happen is not something that’s going to happen overnight. It’s going to take a long time for the industry to really get its head around. But I would say over the next five years you’ll really start to see the insurance and the wealth management markets change in front of our eyes. Just like the banks have started to change over the last five years where you walk into a branch now and you don’t really have people sat behind the counter anymore; it’s all machines. There are two or three people there to help you with an iPad in their hand, but, ultimately, the way that banking occurs has very much gone online.

I think that insurance industry will change and big data will be a huge driver behind it, but it’s probably more like a five to 10-year window. You’re looking more like it’s 2020 to 2025 before we’re really seeing significant, wholesale changes that allow what I just described to properly happen. I would set a target and say in the 2020s you may well then see that ability for you to go out there and source a whole selection of insurance products all grouped together. We’ll say: here’s your insurance policy, it’s going to cost you £1,000 for the year, let’s say arbitrarily, pay us over 12 months, rather than you having to have all of these different policies – then it’ll be big data that allows us to really drive that behind the scenes.